north of neutral dialog

12/10/2010

by anne lueneburger

Richard Edelman, CEO, Edelman Inc., New York

I met Richard Edelman at a panel discussion at UBS on ‘Change in Turbulent Times’ around the end of October. I could not resist asking this panel of C-level executives for an example of what they did as leaders in their own companies to inspire change. Edelman’s response intrigued me. Whenever he visits one of the firm’s 54 offices worldwide, he offers $2,000 to any Edelman employee who commits to quit smoking. All they need to do is sign a contract and give the money back if they violate the agreement within six months. No blood tests are required – their word is good enough for Edelman.

Definitely not a response I had expected, and it made me want to learn more about this apparently unconventional CEO who enjoys a 95% approval rating amongst his employees. A comment from one of his employees, or ’Edels’, says it all: “Richard Edelman is a true, respected thought leader in the field of PR, and the company does a great job of informing and educating all of its staff about the company’s vision.” So I am little surprised to find, when I meet with him at his 25o Hudson office in Soho, that he occupies a cubicle amidst the rest of his team.

The role

Richard Edelman is the president and CEO of Edelman Inc., the world’s largest independent public relations firm. The firm has 3,100 employees worldwide and was named ‘PR Agency of the Year’ in 2009. Advertising Age recognized Edelman as one of the ‘Ten Agencies of the Decade’ (and the highest ranked PR firm), placing him alongside well-known brands such as AKQA, BBDO, Crispin, and Weber Shandwick.

In addition to his expertise in marketing and reputation management, Richard Edelman sits on the Board of Directors of Ad Council, the Atlantic Council, and the National Committee on US-China Relations. And he is member of the World Economic Forum which he has regularly attended for the past 12 years.

The journey

Born in 1955, Richard Edelman is the oldest of Ruth and Dan Edelman’s three children. They started out in a small apartment in Brooklyn, and later moved to and raised their family in Midwestern Chicago. He recalls how his “hardworking, visionary father” was relentless in building the company, Edelman Inc. that he founded in 1952. Dan Edelman’s aim was to launch a profitable, global public relations firm that would both treat clients with respect and would also offer entrepreneurial opportunities to the ‘Edels’. The first thirty years of Edelman Inc.’s focus was geared towards creating a strong base operation in the US and Edelman remembers how his mother was a true partner in building the business:”She is the out-going one, ever the life of the party, able to connect within seconds with even the coldest corporate executive.”

Edelman Jr. enjoyed a top-notch education and graduated with an MBA from Harvard in 1978, at the age of only 23. As is still the case today, it was unusual for Harvard to enroll a student with virtually no prior work experience onto its business school, but Richard Edelman had the chance to apply his negotiation skills to the school’s somewhat skeptical Dean: “You should take me because I am pretty good at everything and not great at anything. I will not lead your orchestra nor catch the touchdown pass against Yale nor will I finish as valedictorian. You need a few well-rounded, normal kids in the class. I am a hard worker who never quits.” As Richard Edelman sees it, it is about “turning adversity into opportunity”.

He didn’t initially plan on joining the family business and was contemplating a job offer in product management at Playtex tampons, a “dream job for a 23-year-old guy”. But his father made him a counter offer he couldn’t refuse, and convinced his son to join the firm with the proviso that he could leave after a year should he regret his decision. Needless to say, he didn’t leave and was instrumental in the next thirty-two years of the company’s development, turning the firm into a global player with a respected presence in Europe, Asia, Canada and Latin America.

Having run European operations and the New York office, the younger Edelman became CEO in 1996, with Dan Edelman ‘retiring’ to the role of chairman. Over the course of his tenure Richard Edelman has pioneered a number of PR niches, including environmental PR and litigation PR. His client list includes a long list of blue-chip firms such as GE, HP, McGraw Hill, Microsoft, Pepsico, Starbucks, and Schering-Plough.

Richard Edelman won the Silver Anvil (the highest award in the public relations industry) in 1981, and PR magazine named him “Best Manager of the Year” in 1995. Ernst & Young awarded him “Entrepreneur of the Year 2006-NY Metropolitan Area”, and in 2008 PR Week singled Richard Edelman out as the “Most Powerful PR Executive”.

Despite various acquisition offers, Edelman Inc. has remained a privately-held family business: Richard’s brother John and sister Renee also hold senior positions within the firm.

6 AM

Edelman is different from your stereotypical CEO in a myriad of ways. Take his blog, 6 AM, that he launched in September 2004 as an example. Three to five times a month he takes a stance on a broad range of topics, be it a dialog with former president Clinton, considering trends in society and business (check out the ‘Edelman Trust Barometer’), the state of the media, or the economic development of Brazil. He also discusses topics which are important to him, such as ‘liespotting’ (he blogs that the average person is lied to 25-200 times per day) as well as reflecting on his personal life when he chats about picking tomatoes in the Hamptons, his mother’s struggles with manic depression, or reflects on a recent Tolstoy novel he may have read.

He also used his own blog to apologize to the general public when Edelman did not stick to its core principles of transparency and ethical PR conduct. The account that got Edelman in trouble was Wal-Mart. In 2006, Business Week outed a seemingly genuine pro-Walmart blog, ‘Wal-Marting Across America’, as an Edelman creation, a fake blog. What the public found particularly upsetting was that Edelman had criticized competitors who had used similarly deceptive PR tactics in the past. Edelman was quick to put his hand up, to learn from the experience, and to move on.

What’s in the cake?

When I ask Richard Edelman about how he found life following in the footsteps of his father’s pioneering leadership, he cracks a smile:”It hasn’t always been easy.” His admiration for his father is clear throughout our conversation, as is a certain sense of competitiveness and of wanting to make a difference. Reflecting back now though, there can be no doubt that Richard has carved his own route, and has made plenty of significant differences along the way.

No one can better illustrate why he has been one of the most successful CEOs in the world of PR, than Richard Edelman himself. Here are a few revealing tasters of the “Edelman philosophy”:

Lead from the front:work on clients. I originate new business opportunities and go to the presentations. I try to recruit top people to work at Edelman. I travel 100 days a year to see our teams around the world.

Loose reins: hire world-class senior people. Give them plenty of latitude to decide on strategy, acquisitions and executive appointments. And hold them accountable for results. Have robust discussions about big issues, not small ones. Avoid pitched battles by seeking a middle ground.

Encourage risk-taking, not risky behavior. Advance the company by promoting entrepreneurial behavior at all levels of the company, but have zero tolerance for any conduct that will undermine the reputation of the firm.

Vision: invest time to stay on top of the key global issues. I attend The World Economic Forum and the WSJ’s Eco:nomics events so I can better understand where the world and our industry are going.

Keep people informed. When it became clear that the recession of 2008 was going to be a serious reset, I met with our Executive Committee and we agreed on a strategy. We would freeze salaries (except for junior ranks), reduce staff only in units losing money and keep our service levels high. I took a pay cut as did my father. We cancelled our global leadership meeting, non-essential travel and initiatives. All of this was explained to our colleagues, first by me, then by others in management. We provided constant updates throughout the downturn.

Reinvest. My father began our tradition of reinvesting every bit of profit into the business. We have built a global network through organic growth and acquisition, without selling or going public while maintaining a conservative balance sheet. We take our acorns and plant new trees.

Network. I try to have a breakfast or lunch every day with a reporter, a non-profit leader, a new business prospect or lawyer/banker referral source. This process keeps me sharp and current.

Family. I leave work early to see my kid play tennis or basketball because it matters to me…

Give Back. I love the time that I spend on non-profit activities. I recently drove a dozen teens from the Children’s Aid Society to a hoops tournament in Hershey, PA (where I learned the meaning of the word, “shorty,” which is modern parlance for a girlfriend).

Know When to Say When. I work 10-11 hours a day. I turn off my Blackberry at 9pm. I read books. I work out five or six days a week. On weekends I trundle around my home in Long Island carrying large bags of mulch for my gardener wife. Workaholic is not in my DNA.

Reinvention…from blogging to classical music to yoga to moving our office downtown to Soho.

Stay humble. I take the subway around New York City (faster and cheaper). I drive a Ford Taurus Station Wagon. I buy my shoes and shirts on sale after Christmas.

While some of these philosophies are familiar from my meetings with other leaders, I felt that Edelman had many unique and refreshing lessons on inspirational leadership.

What stood out most to me was the authenticity with which Richard Edelman leads his organization and team. As Bill George describes it in his book ‘True North’, if you imagine Richard Edelman’s life as a house with different rooms: his office where he works, his study where he relaxes, the dining room where he eats with family and his living room where he receives friends, he would be the same person in every room. He is the real ‘genuine’ deal, and maybe that’s the true key to positive and inspirational leadership.